Contractual Choice Of Arbitration Forum Overridden By State Court

In Off-Spec Solutions, LLC v. Transportation Investors, LLC, the Idaho Supreme Court determined that commercial parties contractual agreement to arbitrate disputes in California was unenforceable in light of an Idaho statute rendering void contract provisions that attempt to prevent a party from enforcing its rights in Idaho tribunals. Confronting the contract’s California choice of law provision, the Idaho Supreme Court purported to apply California law, nonetheless holding that, notwithstanding the contract’s designation of California for the arbitration, a California court applying California law would defer to the Idaho statute as controlling.

The takeaway seems to be that contracting with an Idaho party carries an inherent possibility that disputes will need to be arbitrated (or litigated) there, regardless of how emphatically the parties express a contractual intent for a different venue.

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